Gold and silver fell under strong selling pressure as investors began to reassess the risk of prolonged high interest rates in the US. The immediate catalyst for the negative sentiment was inflation data that indicated a clear acceleration of price pressure in the American economy.
Inflation growth, driven by war effects and higher energy costs, limited expectations for monetary policy easing by the Federal Reserve, hitting particularly non‑interest‑bearing assets.
The price of gold fell by about 1.9%, dropping below $4,565 per ounce. Since last Friday the metal has lost about 3%, and since the start of the war its prices have fallen more than 13%.
>> See also: Real Estate. New taxes will hit the richest
Although gold usually gains in periods of heightened geopolitical uncertainty, this time its safe‑haven role was weakened by rising yields on US bonds and a strengthening dollar. Silver saw an even deeper discount, with its price falling about 6% to around $78 per ounce. This was a sharp reversal after a previous dynamic rally, during which the metal’s prices briefly approached $90 per ounce.
Advertising
This strong rise increased the market’s vulnerability to profit taking, especially in conditions of worsening sentiment toward precious metals and growing aversion to more volatile assets.
Gold at $5,000? "Nothing stands in the way"
Bond yields at their highest in over 2 years
The pressure on gold and silver was reinforced by the debt market situation. The yield on two‑year US Treasury bonds rose to the highest level in 14 months, signaling that investors increasingly expect the Fed to maintain a restrictive monetary policy.
This scenario was also supported by macroeconomic data. US producer inflation accelerated in April to its highest level since 2022, and consumer inflation rose most strongly since 2023. As a result, the market began to curb expectations for rapid rate cuts.
The energy crisis deepens
A key source of tension remained the energy market. The Strait of Hormuz is practically closed, sustaining the energy crisis and increasing concerns about further commodity cost rises. June WTI crude futures are expected to approach $105 per barrel, and higher energy strengthens the risk of entrenched inflation.
For precious metals this means a tough environment: on one hand geopolitical tension remains, on the other rising expectations that central banks will be forced to keep high rates longer.
An additional burden on the gold market was India’s decision to tighten bullion import rules, trying to defend the rupee after earlier import tariff hikes. This dampened demand sentiment in one of the world’s largest gold markets and increased price pressure.
Strong dollar and stubborn inflation dent gold
Recent declines show that precious metals are losing support in an environment of rising yields, a strong dollar, and persistent inflation.
Advertising
Gold has not been able to fully leverage its safe‑haven status, as the market now places greater weight on the prospect of prolonged high rates.
Silver has come under even greater pressure, as investors took profits after the earlier rally.
As a result, the entire precious metals segment remains sensitive to further inflation data, bond market moves, and developments in the energy market.
FXMAG’s editorial team creates high-quality content on financial markets, investing, and the global economy. We provide timely analysis and clear insights to help our audience navigate complex market dynamics.
